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DECREE No

DECREE No.65-CP OF OCTOBER 13, 1995 OF THE GOVERNMENT PROMULGATING THE REGULATION ON THE MANAGEMENT OF ACTIVITIES IN GEM BUSINESS

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Law on State Enterprises of April 20, 1995;

Pursuant to the Ordinance on Mineral Resources of July 28, 1989;

At the proposals of the Minister of Heavy Industry, the Minister of Finance, the Minister of the Interior, the Governor of the State Bank, and on the suggestion of the leadership of the concerned ministries, branches and localities,

DECREES:

Article 1.- To issue together with this Decree the "Regulation on the Management of Activities in Gem Business".

Article 2.-

1. This Decree replaces Decree No.67-CP of October 7, 1993 of the Government promulgating the "Regulation on the Management of Activities in Geological Survey, Mining, Fashioning and Trading in Gems".

2. Item b, Article 3 of the Regulation on the Management of Foreign Exchange issued together with Decree No.161-HDBT of October 18, 1988 by the Council of Ministers (now the Government) is changed into the following: "Precious metals (gold, silver and metals belonging to the platinum group) when transferred from Vietnam abroad or from abroad to Vietnam". The stipulation that gems (diamond, ruby and sapphire) are foreign exchange is now annulled .

Article 3.- The Minister of Heavy Industry , the Minister of Finance , the Minister of the Interior , the Minister of Trade, the General Director of the General Customs Department shall issue documents to guide the implementation of the Regulation promulgated together with this Decree.

Article 4.- This Decree takes effect on the date of its promulgation. The earlier regulations which are contrary to this Decree are now annulled .

The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, and the Presidents of the People's Committees of the provinces and cities directly under the Central Government shall have to implement this Decree.

On behalf of the Government

Prime Minister

VO VAN KIET

REGULATION ON THE MANAGEMENT OF ACTIVITIES IN GEM BUSINESS

(issued together with Decree No.65-CP of October 13, 1995)

Chapter I

GENERAL PROVISIONS

Article 1.- Precious stones referred to in this Regulation are natural minerals having gem quality. Depending on their commercial value, precious stones are divided into two groups:

- Group 1: diamond, ruby, sapphire and emerald.

- Group 2: other precious stones.

Article 2.- All activities in survey, exploration, exploitation, manufacture and fashioning of precious stones; making jewelry and art articles; trading, exporting and importing precious stones (hereunder referred to as activities in gem business) on Vietnamese territory must abide by the provisions of this Regulation and related stipulations of law.

Article 3.- The Ministries, the ministerial-level Agencies and the Agencies attached to the Government shall perform their State management function with regard to the activities in gem business according to their tasks and powers.

Article 4.- The People's Committees at various levels shall perform their State management functions with regard to the precious stone resources and the activities in gem business according to this Regulation and other related stipulations of law; they have the responsibility to protect the areas of precious stones which are not yet assigned to the management of any unit; they shall have to coordinate with the assigned units to protect the mine areas under exploration or exploitation, to prevent the illegal activities of exploitation and trading of precious stones in the localities.

The People's Committee of the province where precious stones are located is entitled to set up a fund to support the protection of the precious stone resource. The precious stone exploiting units shall deduct 1% (one per cent) of the revenue from the precious stones exploited for the Provincial People's Committee to set up this fund.

Aside from the general annual budget balance already approved, the State shall devote 50% (fifty per cent) of the revenue deriving from the tax imposed on the value of the precious stones exploited by the exploiting units, and 50% (fifty per cent) of the revenue of the Corporation as stipulated in Article 16 of this Regulation for the province to invest in infrastructure development, the construction of medical, educational and cultural projects in the mining locality .

Article 5.- The State encourages and creates favorable conditions for the Vietnamese organizations and individuals to invest in the gem business according to this Regulation and related stipulations of law.

Foreign economic organizations and individuals are allowed to invest in the gem business under the Law on Foreign Investment in Vietnam and other related stipulations of law.

The State encourages and creates conditions for the research institutes, universities, economic units and individuals in the country to invest in research and production of equipment for the exploitation and fashioning of precious stones; in the training of gemmologists and technical workers in gem fashioning; in the application of scientific- technical advances with a view to raising the value of Vietnam's gems in compliance with Resolution No.35-HDBT of January 28, 1992 of the Council of Ministers (now the Government) on the management of science and technology.

Article 6.- The State recognizes the lawful ownership of precious stones in the form of raw material or fashioned products by organizations and individuals .

The State protects the lawful interests of all organizations and individuals operating in the gem business as provided for by this Regulation and related stipulations of law.

Article 7.- The Vietnam Gem and Gold Corporation (hereafter referred to as Corporation) is a State enterprise set up to serve as the core in the building and development of the gem industry and the manufacture of jewelry in Vietnam .

The function, tasks, powers, organization and activities of the Corporation shall be defined in the Statute on Organization and Activities of the Corporations ratified by the Government.

Chapter II

GEOLOGICAL INVESTIGATION, SURVEY AND EXPLORATION OF GEM MINES

Article 8.- The Ministry of Heavy Industry shall organize the research and geological investigation of precious stones, and evaluation of gem reserves in the process of basic geological and mineral research and investigation with State allocated funds.

On the basis of the results of the basic investigation on precious stones by the Ministry of Heavy Industry, the Prime Minister shall consider and assign to the Corporation areas with potentials in gems of Group 1 so that the Corporation might organize the survey, exploration and exploitation.

The Corporation shall organize the survey and search for precious stones in the mining areas assigned to it, under the provisions of and with funds allocated by the State budget. The mine prospection shall be conducted by the Corporation with its own investment funds.

The investigation, survey, prospection and exploitation of precious stones of Group 2 shall be conducted as currently stipulated for hard minerals.

Article 9.- The geological documents and samples of precious stones collected in the process of geological investigation, research and prospection must be preserved according to prescriptions of law.

CHAPTER III

EXPLOITATION OF PRECIOUS STONES

Article 10.- The Corporation is assigned the task of organizing the exploitation of mines of gems of Group 1 and fully collecting the accompanying minerals; protecting and making rational use of the resources, protecting the environment and the ecology in the process of exploitation .

The gem deposits of small scale which lie scattered and do not form a concentrated mine and where exploitation on industrial or semi-contractual scale is not economically efficient shall be zoned off and assigned to the management of the People's Committee of the local province which shall organize its exploitation by the local population. The exploitation must ensure safety, order, social security and protection of the environment and the ecology.

Article 11.- The Vietnamese economic organizations and individuals (hereafter referred to as units) that wish to exploit precious stones of Group 1 in the mining areas already assigned to the Corporation, must do it through bidding and the signing of production sharing exploitation with the Corporation ; submit to control and supervision of the Corporation in the process of exploitation.

The foreign economic organizations and individuals that wish to exploit gems in Group 1 must enter into joint ventures with the Corporation under the Law on Foreign Investment in Vietnam and must have the permission of the Prime Minister.

Article 12.- The contract on exploitation and production-sharing agreed upon and signed between the Corporation and the winning bidder must abide by the regulations of law on mineral activities, notably in the following contents:

1. The legal capacity of the organization or individual that is party to the Contract.

2. Object of the Contract;

3. Term of the Contract;

4. Conditions for terminating the Contract before term, or extension of the Contract.

5. Rights and obligations of the parties to the Contract.

6. Conditions for the transfer of rights and obligations of the parties to the Contract.

7. Responsibility for the protection of the environment and social order and safety during the process of exploitation.

8. Modalities for the settlement of disputes arising from the Contract.

Besides, the contracting parties may agree on other terms in the Contract, provided they do not contravene this Regulation and current law.

Article 13.- Subject to bidding are the gem-containing lots of land lying within the area under the exploitation plan drawn up by the Corporation and approved by the authorized State agencies that allot land for exploitation as provided for in the Land Law. The area of the lots of land to be offered for bidding shall be determined by the Bidding Council. All misuse of the bidding to trade in the bidding right and gain profit from the price difference is strictly forbidden.

Article 14.- The bidding floor price is the minimum price offered for the bidding with regard to each gem-containing lot of land. It is based on a unified unit price for all the lots in each mining area and shall be publicly announced.

The unit bidding floor price is constituted by these factors: expenditures on geological investigation, mine survey and prospection; expenditures in the utilization of the infrastructure in service of the exploitation in the mining area; the land rent, the minimum mineral resource tax and the expenditures on environmental rehabilitation, compensations for crops and other compensations paid by the exploiting unit.

Article 15.- The President of the Managing Board of the Corporation shall sign the decision to set up the Bidding Council for each gem mining area. The Council shall comprise a representative of the Corporation who shall act as President of the Council, a representative of the People's Committee of the province where the mine is located, a representative of the Ministry of Heavy Industry, and a representative of the Ministry of Finance.

The Bidding Council has the tasks of examining and approving the bidding price proposed by the Corporation, receiving the bidding dossier, opening the bidding, announcing the bidding result and the winning unit.

The Regulation on bidding for the gem mines shall be worked out by the Corporation and ratified by the Minister of Heavy Industry.

Article 16.- The winning unit shall have to bear all expenditures in exploiting and in organizing the internal protection of its exploiting area. The value of products collected in the process of exploitation, after payment of different kinds of tax (except the resource tax which has been paid earlier and accounted for in the bidding price) and other expenditures, shall be divided according to this ratio: 85 (eighty five per cent) for the exploiting unit, and 15% (fifteen per cent) for the Corporation .

For the gems which sell for one billion Vietnam Dong and more per piece, this ratio shall be 75% (seventy five per cent) for the exploiting unit, and 25% (twenty five per cent ) for the Corporation.

Article 17.- The revenue from the bidding and from the production- sharing exploitation contract shall be recorded into separate revenues among the revenues of the Corporation.

The Ministry of Finance shall issue the regime of collection and remittance to the State budget of the revenues of the Corporation after asking for the opinion of the Prime Minister.

Article 18.- The gem products exploited by the winning units must be tested on completion , classified and evaluated. Those valued at 100 (one hundred) million Dong or more per piece, shall, after evaluation, be sealed and kept at the Corporation in order to be offered for auction. Those valued at less than 100 (one hundred) million Dong per piece shall be entrusted to the exploiting unit or the Corporation for management and marketing.

Article 19.- The Corporation has the duty to provide guidance in exploitation technique in order to get the maximum of minerals, protect the environment, ensure labor safety; inspect and supervise the whole process of exploitation activity of the exploiting units.

The test on completion, classification and evaluation of products in the process of exploitation shall be conducted by the Test on Completion Committee. This committee shall be set up by the Corporation and comprise an equal number of representatives of the Corporation and the exploiting unit, each having at least two representatives.

Article 20.- The exploiting unit is entitled to transfer the exploiting right to any eligible organization or individual that shall continue exercising the rights and obligations which the unit has signed with the Corporation. In case the State recovers or requisitions the mine for security or defense reason, the exploiting unit shall be paid compensations according to current law.

Chapter IV

REFINING, FASHIONING AND TRADING IN PRECIOUS STONES

Article 21.- Any Vietnamese economic organization and individual that wishes to refine, fashion or trade in precious stones or to manufacture jewelry and art articles in precious stones, must set up their production or business establishments and register for operation as prescribed by law.

Article 22.- The State encourages and creates all favorable conditions for all organizations and individuals to carry out the purchase and sale of precious stones (raw materials or already refined and fashioned) at the precious stone and jewelry centers of the Corporation. Aside from these centers, precious stones can be purchased and sold only at the office of the enterprise and the shops licensed for gem business, or precious stone markets in the mining areas managed by the local administration with the participation of the Corporation.

The Corporation shall periodically organize auction fairs of precious stones in the country or abroad according to prescriptions of law.

The State encourages the exportation of precious stones already refined and fashioned or gem-set jewelry and the importation of various kinds of raw gems to process and fashion them for re-export.

Article 23.- The exportation of gems valued at 100 (one hundred million) Dong and more must be provided with Trading Contracts and Sale Vouchers made in the forms issued by the Ministry of Trade and the Ministry of Finance. For those gems valued at less than 100 (one hundred million) Dong, the dealer shall have only to produce the Sale Vouchers to the border gate customs office. The export tax shall be paid by the sales units under the Trading Contract and the Sale Voucher. The importation of raw gems to process and fashion them for re-export shall not be limited in quantity, but the dealer must abide by the regulations of the law on goods import.

The Ministry of Trade shall coordinate with the General Customs Department and other concerned State agencies to issue regulations on the management of the gem market and export and import after asking for the opinion of the Prime Minister.

The Ministry of Finance shall issue the model form of the Contract and the Receipts for Purchase and Sale in the gem business according to its jurisdiction.

Chapter V

HANDLING OF VIOLATIONS AND REWARDS

Article 24.- All activities in the survey and prospection of precious stones which do not comply with the stipulations of this Regulation and other related stipulations of law; the violation of the current stipulations of law on the protection of secrets of gem geological documents shall be handled strictly according to law.

Article 25.- The exploitation, processing, purchase and sale and export and import of precious stones which do not comply with the stipulations of this Regulation and other related stipulations of law shall, depending on their character and the seriousness of the violation, be subject to administrative sanctions or examined for penal liability as prescribed by law.

In all cases, the amount of precious stones smuggled or dug up and panned illegally shall be confiscated and remitted to the State Treasury.

Any individual or organization credited with discovering, denouncing or preventing in time the acts of illegal exploiting or smuggling precious stones shall be commended and rewarded according to the common provisions.

Article 26.- The persons who abuse their positions and powers to contravene the stipulations of this Regulation shall, depending on the character and seriousness of the violation, be subjected to administrative sanctions, or examined for penal liability according to prescriptions of law.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 27.- This Regulation takes effect on the date of its promulgation. All earlier stipulations which are contrary to this Regulation are now annulled.

Article 28.- Sixty days at the latest after the promulgation of this Regulation, the concerned ministries and branches shall have to issue documents to guide its implementation.

On behalf of the Government

Prime Minister

VO VAN KIET